Transforming – the Idris Jala way


  • Business
  • Saturday, 19 Dec 2009

DATUK SERI Idris Jala, the man from Bario in the highlands of Sarawak and a career Shell person until he moved to Malaysia Airlines to take a challenging role to turn the ailing national airline around, is of course no stranger to transformation.

To him, transformation is a big change, or as he puts it, it’s about big, fast results or BFR. Along with it comes a large appetite for risk because when changes are very major there are serious risks of things going wrong.

“The bigger the risk, the bigger the resistance to change. I have never gone through a transformation where there is no resistance to change,” he says.

What he brings to the Performance Delivery and Management Unit or Pemandu, of which he is CEO and which will drive the Government Transformation Plan (GTP), is his trademark style of engagement, transparency and accountability which stood him in such good stead with his earlier change plans.

When Jala became managing director of Malaysia Airlines in December 2005 after 23 years at Shell, his mandate was to turn around the airline. It had made a loss of an unprecedented RM1.7bil that year.

Barely three months later, Jala publicly unveiled his first turnaround plan – Malaysia Airlines would cut losses from RM1.7bil to RM620mil in 2006, achieve a profit of RM50mil in 2007 and a record profit of RM500mil in 2008.

It was a move never before or since seen in the corporate world – a listed company publicly stated its profit targets, mentioned broadly how it proposed to achieve them and kept details of how exactly it was going to achieve them out of the public eye. And the targets were simply stupendous.

Most people considered that plan way too ambitious and some even treated it with derision. But in the second year itself, Malaysia Airlines made a record profit of over RM900mil, its highest ever.

That led to Malaysia Airlines’ second turnaround plan, this time for five years. The profit target – RM1.5bil by 2012 and as much as RM2bil–RM3bil if conditions are more favourable.

Over the last 10 or so years, in addition to Malaysia Airlines, he turned around Shell’s LPG operations in Sri Lanka, and led the business turnaround of Shell MDS, the first gas-to-liquids commercial plant in the world and the sole supplier of clean diesel fuel for the 2004 Olympics in Athens. He also headed a business consultancy unit within Shell.

Perhaps his biggest asset is his ability to engage people at all levels and infect them with his eternal optimism, and buttressed by all the effort and detail, turn that to real work done and make the impossible possible.

But there are critics who are sceptical: “This is not Malaysia Airlines, this is the Government. Those politicians and bumbling, bungling government officials will swallow him up.” Perhaps. But that’s not what Jala thinks. He believes success is assured - it’s a question of how much.

“I accept that I can fail. That makes me unafraid of failure,” he has said repeatedly in the past.

That kind of mental mood, and a stoic resolve to let whatever happen after you have done all you can, may be the very ingredient needed for success – it stops you from dwelling on the possibility of failure and doing instead all it takes to gain success.

Below are excerpts of the answers Jala gave us from questions StarBizWeek posed to him on the sidelines of this week’s GTP open day at the Sunway Pyramid Convention Centre.

SBW: What you did at MAS, you’re expanding it into a nationwide approach here?

Jala: Yes, it’s the same. Before you do anything, you better know the details (of the problems and the solutions). When we say we want to improve urban transport, the issues are brainstormed in the lab. We have to come out in detail exactly how we’re going to make that happen.

The lab examined KTM Komuter trains, right down to how many passengers are on the trains every day. We then knew that the answer was to increase the number of trains as they were running at over-capacity.

Then we examined buses and their routes and looked at the integration of the different transportation modes. We brought reams of data into the labs to be analysed.

For crime, we have made a pronouncement that we want to reduce street crime by 20%. But pronouncing a KPI is not good enough. Being clear about how you’re going to achieve that is most important. We got all the data from the police to find out where these crimes are taking place in urban areas and realised that there were only around 50 hotspots.

Once you know that, it becomes obvious where the police need to be deployed. With this intelligence, we are moving away from the old method of deploying police based on geographical spread. Immediately, 1,100 police personnel have been redeployed to these hotspots. We will also install more CCTVs in these areas.

There is going to be a big cost to these projects, such as purchasing new trains. Where is this funding going to come from?

The Prime Minister has made it very clear that the NKRA (national key results areas) is priority and he said so because these are things that the rakyat want. To get the money for these things will involve reallocating funds, using money from other areas which are deemed less urgent.

In the book (a planned road map detailing the KPIs to achieve the six broad goals of the GTP will be published early next year), we will talk about how much we need. These numbers won’t be firm until we get the input from the rakyat.

If the rakyat suggest that there are other things that are more important than what we thought of in the lab, then we may need to rejig it.

What’s the progress so far?

Some activities have started, some not yet. For example, on the KTM Komuter trains, we asked them how many carriages they had, and they said 58 carriages. How many are operational? 25. How many are broken? 33. No wonder we have a problem. How come the 33 are not operational?

It’s because there is not enough money for maintenance. And there is not enough money for maintenance because KTM is losing money. And KTM is not getting subsidy from the Government because it is losing money.

So it is a chicken and egg situation. Two things will happen. We intend to replace some carriages and acquire new ones. The carriages come only in 2012.

Yes, unfortunately it takes time. Just like aeroplanes, it takes time.

But by buying the new carriages, does it fix the bigger problem KTM is facing, which is that it cannot seem to run an operationally profitable business?

To be fair to them, there is a revenue shortfall. They cannot generate sufficient revenue with the kind of fares they are charging. If you never increase fares, you’ll never make money.

There’s also an operational problem of under-capacity. KTM does not have the right capacity to handle the passengers. Today, KTM (Komuter) has carriages that can fill 400 passengers. But there are 600 people going on these trains, so they are really packed. The laboratory was very clear in identifying the problems. Once identified, we then figured out which ones to start with first. You cannot start fixing the problem by raising fares as the service levels are not there yet. So we’re starting by spending money to get the new carriages in and improving the service.

The next step will be to introduce differentiated fares, like Malaysia Airlines, lah. You pay for what you can afford and the service you expect. In the interim, while waiting for the carriages to come, the plan is to increase the frequency of the trains in order to use the carriages more efficiently. That has already begun.

Let me shift into other areas – like basic rural infrastructure. A big part of the GTP is to aim to provide the basics in rural areas. We will give them roads, clean and treated water, and electricity. Based on our findings, many of the rural areas do not have access to those things. I think from 2010 to 2012 there will be the highest amount of investment being poured into roads and infrastructure since the start of our independence.

Is it economically viable to do that?

Yes. It will stimulate the economy because there will be more construction. The reality today, as we move towards a high-income economy, when we talk about 1Malaysia, is that it must comprise and include everybody. We must include the poor. We cannot bring a country to become a highly progressive society if there are Malaysians left behind. That is why we are focusing on the low-income households. But we are also looking at urban development.

What is the concern of urbanites? The public transportation system. And if you don’t fix that, the people will say that the Government does not truly recognise their problems. We give the most income tax to the country, and yet how come our public transport system is not as good as in other countries?

What are you doing about corruption?

We’re putting in place a check and balance. We’re cutting the approval time (for all sorts of Government services) so that we don’t empower anyone. Now you don’t have to wait one month for your passport. You get it within two hours. The power is no longer there with that person to facilitate the processing of the passport.

You don’t face problems of resistance?

Sure we do. Every change has resistance. This transformation is not incremental. It is big, fast results. Because it is big, it also carries a big risk. So we must have the appetite for making the big changes and handling the associated risks.

Here’s an example. We have identified that a key problem is a low quality of pre-school education. With a not-so-good foundation, the problems will creep into the secondary and university levels. Currently, only 60% of all the students who go to primary one have access to pre-school. There are 40% of students who have never been to kindergarten. So by the time they go to primary one, that 40% will be lagging behind.

What we have to do now is to improve primary and pre-school education. So we are going to convert something like 20,000 teachers from secondary schools and put them into primary schools. Naturally, there is resistance, but these are fundamental issues we will have to grapple with. If we don’t do this, 23 years from now, this group of people (the students) will be lagging even further.

I have never gone through a transformation programme where there is no resistance to change. So I have said, guys if we want to make incremental changes, that’s okay. Small risk, small resistance. But big transformation is big risk and big resistance. But the price (of not doing it) is big lah. So is the reward.

We all agree that Vision 2020 is a good thing. But at the current cost and speed, we will not get there. But we can get there if we transform and do those things we said we are going to do.

In your laboratory on education, was it addressed that part of the reason why we don’t have good universities is because of the politicking there. We have had a huge brain drain of our university faculty.

That’s partly true and partly false. But we only know the instant calculus. We fix the problem that is there now. And we know that the problem is in pre-school and primary. So we better fix this. So that when these people move into secondary school and university, we have time to fix it.

But you cannot eat a whole elephant. You have to chop it into bits and eat it. We cannot solve the whole problem in one sitting. It doesn’t mean nothing is being done in those areas. The Ministry of Higher Education under Datuk Seri Mohamed Khaled Nordin, is doing things to improve the universities.

Going back to corruption. Malaysia seems to keep falling in the corruption index, so what kind of resistance are you facing?

They are three buckets of corruption. One is called enforcement and regulatory corruption. The other is called procurement corruption. Then there is political corruption.

Some of the recommendations we made include open tenders, and making sure no minister gives out support letters for any projects. The fact is our corruption index is falling. If that keeps happening, foreign investors won’t have confidence to invest here as they feel policies are so opaque.

We have no choice. We have to make changes to the things that we are doing to reduce corruption. Stiffer punishment is another one. We cannot deal with corruption without stiffer punishment. We are also trying to reduce the time for cases to be tried, particularly those that generate a lot of public interest, to under one year. Some drag on for five years.

So are we correct to say that the message now, to those ‘on the take’ is that the Government is going to catch you and punish you?

Yes.

But you really think you can succeed? That this programme is different from all the other attempts the Government has made in the past to change and transform?

I have no doubt about success because success is a matter of degree. We may not get to the highest peak, but definitely we will succeed to higher levels from current levels. I always believe certain things we can control and certain things we cannot. Sixty per cent of the things in our lives is not in our control. The 40% that we can control, we try our best.

We’re sure you spend a lot of time thinking how you are going to get the buy-in from the 1.2 million civil servants.

The first thing we did was not get a roomful of consultants. Instead, we got a roomful of civil servants. I asked the Cabinet for 240 civil servants. “Please give them to me for six weeks. We will sit there and find solutions,” I told them.

The labs are like a nursery. The lab is a safe place for them to grow. Once it is agreed, we then put them for implementation.

We created something called Delivery Task Force which is chaired by the Prime Minister. He has attended every single one of the meetings. Every month.

The political will is there. The commitment is absolutely there. I sit in those meetings. We report what is on track, what is not on track, who is not delivering. Just like in the private sector lah. There is no difference between how I ran MAS and how I am running this.

Again, why is it different this time, from what has been attempted in the past with limited or no success?

Nobody has done it like this. There is no generality. We don’t talk about pronouncement of policies. I don’t want to hear that. We are talking about things to do.

Yes, we have heard of these things before. But nobody pins it down like we are doing. The difference is in the details – the gory details. Every country can say it wants to improve rural development. But how are you going to do that? We bring it down from 30,000 feet to three feet. That is why we came out with the labs.

The solutions are coming from the civil servants, that is why these solutions will be implemented, because it is invented by them.

To be really honest, they knew the answer all this while. It was just that there was never an opportunity for everyone to talk and brainstorm together.

Related Stories: Instruction to deliver GTP details make the difference

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